Emerging Stocks Rise on China as Stimulus Lifts Exporters

By Harry Suhartono and Maria Levitov -
Mar 5, 2013

Emerging-market stocks rebounded
from an 11-week low and currencies strengthened as China pledged
to increase fiscal spending and investors speculated that
exporters will get a boost from U.S. monetary stimulus.

Samsung Electronics Co. (005930), which got 62 percent of revenue
from outside of South Korea in 2011, climbed to a one-week high.
Chinese banks including China Minsheng Banking Corp. drove an
advance in the CSI 300 Index. Brazil’s Bovespa index reversed
gains as Diagnosticos da America SA, a Brazilian medical-
diagnostics company, tumbled. The South Korean won rose the most
in a month against the dollar.

The MSCI Emerging Markets Index advanced 0.8 percent to
1,049.94 in New York. China’s Finance Ministry said that it will
boost fiscal spending by 10 percent this year as the country
held its growth target at 7.5 percent. U.S. Federal Reserve Vice
Chairman Janet Yellen said yesterday the central bank should
press on with $85 billion in monthly bond buying. The Dow Jones
Industrial Average jumped to a record.

MSCI’s emerging-markets gauge has declined 0.5 percent this
year, compared with a 6.1 percent gain in the MSCI World Index (MXWO)
of developed-country stocks. The measure of developing nations
trades at 10.5 times projected 12-month earnings, compared with
the MSCI World’s 14 times, according to data compiled by
Bloomberg.

Mexico’s IPC Index rose 0.3 percent, climbing for the first
time in three days. Chemical maker Mexichem SAB (MEXCHEM*) surged 4.9
percent, the most since July 26, after Corporativo GBM SAB
raised its rating on the stock to the equivalent of buy. Trading
volume was more than triple the three-month average.

Brazil’s Bovespa index slid 1 percent, after rallying as
much as 1.3 percent earlier today. Dasa fell the most since July
after reporting its first loss since 2010. BRF Brasil Foods SA,
the world’s biggest poultry exporter, gained 1.9 percent in Sao
Paulo after earnings exceeded analysts’ estimates.

Chavez Death

Venezuelan President Hugo Chavez died at 4:25 p.m. local
time after a battle with cancer, Vice President Nicholas Maduro
said. Five-year credit-default swaps on the nation’s debt rose 3
basis points after the announcement to 640 basis points,
according to prices compiled by Bloomberg.

Russia’s Micex Index climbed 1.4 percent, gaining for the
first time in four days as GMK Norilsk Nickel rose 3 percent.
OAO LSR Group (LSRG), a Russian property developer, jumped 2.8 percent
in London. The company recommended a 20 ruble-per-share dividend
for 2012, the same level as the previous year.

Technology Shares

Turkey’s ISE National 100 Index gained for a seventh day,
the longest winning streak since Jan. 24, rising 0.5 percent.
Tofas Turk Otomobil Fabrikasi AS (TOASO), the Turkish carmaker co-owned
by Fiat SpA, climbed 3 percent to a record, after the company
said it would pay 0.96 lira a share in gross dividends.

“In the short term, China’s plan would be good for
equities as it provides liquidity to markets,” Laurentia Amica Darmawan, who helps manage $530 million at PT First State
Investment Indonesia, said in Jakarta. “Is it sustainable? I’m
a bit doubtful about the impact for the medium term.”

Premier Wen Jiabao gave the targets in his final opening
address to almost 3,000 lawmakers at the annual meeting of the
National People’s Congress in Beijing.

Fiscal Spending

Fiscal spending is targeted to rise 10 percent and revenue
will grow 8 percent, excluding funds to be transferred from the
stabilization fund, China’s Ministry of Finance said in a budget
report presented to the National People’s Congress.

China Resources Power Holdings Co., an energy producer that
owns wind farms, rose 5.4 percent. China will step up efforts to
cut emissions and improve energy efficiency this year, the
National Development & Reform Commission said in a report today.
The country plans to bolster domestic demand by boosting retail
sales 15 percent this year, the commission said.